by Calculated Risk on 10/22/2007 10:15:00 AM

From Bloomberg: U.S. Housing Decline Threatens to Last Into 2009: John F. Wasik. A few excerpts:

[Ivy] Zelman ... says it's unlikely the U.S. housing market will recover before 2009, adding there's a ``50 to 60 percent chance of a recession,'' as the housing slump curbs consumer spending.
...
When you consider the huge home inventories and tight-as-a- drum mortgage restrictions, it's easy to conclude that the housing slump could extend well past 2008. ...

``I've never seen the market as bad as this,'' Zelman said. ``And it could get worse. The home-price decline could range from 16 percent to 22 percent.''
...
``These are the worst inventories we've seen as a nation,'' she says.
...
``Some 74 percent of consumer expenditures are correlated to housing. I don't think the consumer will hold up. They will cut back on things like buying cars and vacations.''

While Zelman forecasts that sales will drop for the next two years, she isn't as optimistic on home prices, which she says may continue falling until 2010 or 2011.

``We'd be better off if prices corrected all at once. It will get worse before it gets better.''
...
Keep in mind that job growth and consumer spending bear close scrutiny. If Zelman is right about a recession coming, then prices may fall more, plunging the housing market into an even sorrier state.

It's nice to have Zelman back in the news. Her views are close to mine.